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Market Brief – Tuesday 5/14/19

With no less than ten tweets this morning from President Trump to reassure investors about a resolution to the trade war, investors resumed buying stocks while Treasury yields largely ignored the news. Watch the Treasury bond market, as it is leading the equity market and suggesting that stocks will need to revisit their December lows.

Adding to the disinflationary backdrop, import prices fell -0.2% on an annualized basis, while export prices rose a mere +0.2% on an annualized basis. Stripping out petroleum prices and import prices fell -0.6% MoM and -1.0% annualized.

Stocks tried to rally after yesterday’s big drop but found sellers in late trading. The broad equity indices closed higher along with Treasury yields which closed slightly higher on the day.

Physical gold was once again rejected at its overhead resistance of $1,300/oz which continues to suggest gold prices are headed lower. Silver mining stocks traded lower and are hanging onto a support level that if broken, would suggest silver mining stocks, along with gold mining stocks, will revisit their 2015-to-2016 lows. Should this happen, be prepared to back the truck up and buy.

Emerging Markets stocks, a good proxy for the direction of gold, broke over resistance in early trading but closed just under resistance. EM stocks are indicating they will revisit their lows from last year, which should bring gold mining stocks down with them.

Agricultural commodities lurched higher on continued reports that the Trump Administration will pump $15 billion into buying commodities from farmers. With more rain coming to the water-logged Midwest, farmers will be welcoming the government’s money.

The American Petroleum Institute reported crude inventories as Crude: +8.6mm (-1.3mm expected), Cushing: +2.1mm (+1.3mm expected), Gasoline +567k (-300k expected), and Distillates +2.2mm (-1.0mm expected). Crude oil traded lower after the report.